Healthy infrastructure, automotive demand keeps domestic steel consumption robust as India turns net steel importer: Report

New Delhi [India], July 19 (ANI): Domestic finished steel consumption remained strong in the June quarter, supported by infrastructure spending, real estate activity, automobile manufacturing and heavy engineering demand, with demand outpacing production and resulting in India becoming a net importer of finished steel, according to an HDFC Securities Institutional Research Q1FY27 Results Preview report.

The report said, “Domestic consumption of finished steel (FS) in India remained healthy as it rose ~9% YoY in Q1FY27.” It attributed the growth to “continued momentum in large-scale public infrastructure capex, steady demand from real estate and urban development projects, a rising demand from automotive manufacturing, and heavy engineering sectors.” It added that “FS production growth was slower at 6% YoY, leading to net imports in Q1FY27.”

On pricing, report said domestic hot-rolled coil (HRC) prices continued to strengthen during the quarter, while rebar prices moderated after mid-April. As a result, the brokerage expects steelmakers to report higher blended realisations for the quarter, although rising raw material costs are likely to temper margin gains.

The report said, “While domestic HRC (flats) continued to trend higher in Q1FY27, rebar (longs) witnessed a cool-off mid-April’26 onward.”

It added, “We estimate steel companies will continue to deliver higher blended realisation QoQ in Q1FY27.”

However, “Steel companies will also report higher cost of production (CoP) as both coking coal and iron ore prices are on a rise,” with coking coal prices expected to increase by around USD 15-20 per tonne quarter-on-quarter and iron ore prices by about Rs 300 per tonne. “These should moderate the gross and EBITDA margin expansions from robust pricing gains,” the report said.

Despite higher input costs, the brokerage firm maintained a positive outlook on the domestic steel sector, citing healthy demand and supportive pricing. (ANI)

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